Last week’s launch of a flex-fuel car and motorcycle by Maruti Suzuki and Hero MotoCorp has sparked intense debate over the near-term sales potential of these vehicles. Along with the launch of Delhi’s first E85 fuel pump, this represents India’s most aggressive push for flex-fuel technology since the start of its ethanol-blending programme.
Mint unpacks why this new technology is making waves.
What are flex fuel vehicles?
Flex fuel vehicles are designed to run efficiently on petrol blended with any level of ethanol. In India, this refers to vehicles that can operate seamlessly on any fuel mixture ranging from 20% to 100% ethanol (E20 to E100) without sustaining any engine damage. These vehicles are equipped with ethanol content sensors and ethanol-resistant fuel lines and seals, among other components, as ethanol is corrosive.
To be sure, flex fuels are not a new technology. They date back to the early 2000s, when Volkswagen introduced such vehicles in Brazil. Today, this technology dominates the Brazilian market, accounting for more than 80% of all passenger vehicle sales.
Will there be financial incentives to adopt such vehicles in future?
launched on Friday was ₹20 cheaper than petrol. There have been discussions on reducing goods and service tax (GST) on such vehicles but the government so far has kept its cards close to its chest.
Crucially, owning a flex fuel vehicle does not obligate a consumer to use higher ethanol blends such as E85 or E100. Because higher ethanol blends deliver lower fuel mileage and flex fuel vehicles carry a higher upfront cost, industry executives argue that both tax incentives and lower fuel prices are necessary to drive adoption. Highlighting this cost barrier, Hero MotoCorp’s recently launched flex-fuel bikes, the HF Deluxe and Splendor+, were the most expensive variants of their respective models.
How big could the segment become?
An internal government policy note circulated in January, outlining vehicle market mix under upcoming emission norms, projected that flex fuel vehicles, including strong hybrid variants, would capture a 5% share of overall passenger vehicle sales by FY32. Crucially, these estimates were made before the , an event that has since accelerated the government’s timeline for rolling out the necessary fueling infrastructure.
For now, automotive executives anticipate a gradual ramp-up. Both Hero MotoCorp and Maruti Suzuki have restricted their initial rollouts to entry-level models, with Maruti expected to prioritize the commercial fleet segment first.
Why do automakers remain cautious about such vehicles?
The primary hesitation stems from the lack of clear financial incentives to offset the higher upfront manufacturing costs. While the fuel itself is cheaper, its lower fuel efficiency raises questions about whether consumers will adopt the technology without a price reduction on the vehicle itself. Currently, flex fuel vehicles face the same tax rates as standard internal combustion engine (ICE) vehicles.
“Policy measures that help offset the higher upfront technology costs for OEMs (original equipment manufacturers) and improve consumer affordability can accelerate the adoption of alternative fuel vehicles in India,” a Hero MotoCorp spokesperson previously told Mint.
While only and Hero have launched flex fuel models so far, Tata Motors PV and Mahindra and Mahindra are also likely to join them in the next 12 months, which could help drive adoption.
Is there enough supply of flex fuel in the country?
Ethanol producers stand to be primary beneficiaries of the flex fuel expansion, as the sector currently holds significant surplus capacity. According to data from the All India Distillers’ Association, India’s ethanol production capacity reached 20 billion litres as of March, well ahead of the roughly 11 billion litres required under the current 20% blending mandate. Industry executives note that this massive excess capacity ensures producers are fully equipped to immediately scale up supply as demand grows.
Samir Somaiya, chairman and managing director at Godavari Biorefineries, told Mint, “If we are selling at ₹65 per litre to oil marketing companies (OMCs) and they sell it with some margin straight to consumers, the cost per kilometre will be lower for consumers even if the mileage is less. The emissions will also be significantly less.”